& cplSiteName &

Time for Set-Top Makers to Merge – Study

Alan Breznick
5/30/2014
50%
50%

As four of the biggest pay-TV providers in North America make plans to merge into two, it's time for set-top makers to do the same.

At least so says ABI Research . In a new study released this week, ABI concludes that a consolidation of set-top vendors is needed to meet the evolving demands of such combinations as AT&T Inc. (NYSE: T)'s proposed $49 billion buyout of DirecTV Group Inc. (NYSE: DTV), not to mention Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s proposed $45 billion acquisition of Time Warner Cable Inc. (NYSE: TWC). (See AT&T to Acquire DirecTV for $48.5B and Comcast's TWC Coup: 3 Things to Know.)

In a research note, ABI argues that AT&T's plans to acquire DirecTV particularly highlight the need for set-top boxes that can serve more than one kind of video delivery network. Yet, for the most part, the world's five top STB vendors -- Arris Group Inc. (Nasdaq: ARRS), Cisco Systems Inc. (Nasdaq: CSCO), EchoStar Corp. LLC (Nasdaq: SATS), Pace Micro Technology , and Technicolor (Euronext Paris: TCH; NYSE: TCH) -- "are heavily weighted to one sector, or, in some cases, have robust proportions serving two or three sectors," the firm said.

ABI adds that these five vendors, accounting for about 37% of global STB revenues in a mature yet fragmented market, cannot keep meeting the demands of pay-TV providers as they seek to deploy their video services over multiple networks, including cable, IPTV, satellite, and, presumably, over-the-top. "We continue to believe that integration of historically separate cable and IPTV providers with satellite set-top OEMs would bear fruit in the increasingly hybrid set-top box world generated with acquisitions," like AT&T's proposed purchase of DirecTV, said Sam Rosen, practice director of ABI Research.

ABI predicts that the global set-top market will top out at around 265 million units sold next year before starting to decline. In 2012, the last year for which figures are available, STB makers sold 236 million boxes around the world.

Fresh off its acquisition of Motorola Home, Arris captured the lead in the STB market with $2.1 billion in set-top revenues last year, driven by sales of 18.5 million cable and IPTV boxes, according to ABI. Pace came in second in revenues, even though it dropped behind third-placed Technicolor in sale volume.

Rosen explained that Pace, despite a 10% drop in sales volume, booted its STB revenues slightly by "focusing primarily on the high-end gateway market." He also credited Pace's performance to its "focus on services."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
5/31/2014 | 11:23:01 PM
Re: Deja vu
@DOShea, do you think there is a real future for the STB market? I think the prediction might be coming true. 
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
5/31/2014 | 11:20:03 PM
What about OTT
I think this really overlooks the impact that smart TVs and OTT media will have in the market. I think settop boxes are going to need to move to just a software platform that runs on a TV or USB drive that you plug in. The days of one sitting around are coming to an end. 
DOShea
50%
50%
DOShea,
User Rank: Blogger
5/31/2014 | 10:47:35 PM
Deja vu
Seems like bad things have been predicted for the largest of the traditional set-top box vendors for a while now. I thought the market was supposed to have started declining already. Well, I guess, some big service provider mergers will finally force some change.
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
5/31/2014 | 3:55:34 PM
Logical
Seems logical to me - there's probably too many set-top makers in an environment of service consolidation. 

And to be honest, there really isn't much innovation happening with these boxes. They aren't really keeping up with today's digital world. These boxes need to be able to integrate with other consumer electronics. Being able to control them from a phone, laptop of tablet would be way more useful than a remote. 
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
CommScope – Meeting the Demands of Tomorrow's Networks

3|24|17   |     |   (0) comments


Phil Sorksy, Vice President International at CommScope, discusses addressing the challenges faced by service providers today, and as future trends emerge.
LRTV Huawei Video Resource Center
AMS-IX & Huawei's OSN 902

3|24|17   |     |   (0) comments


Huawei shows how its OSN 902 platform helps the Amsterdam Internet exchange to connect the world using multiplexing.
LRTV Huawei Video Resource Center
Huawei's Smart Energy Innovation Center

3|24|17   |     |   (0) comments


In Nuremberg, Huawei showcases its latest capabilities in the digitalization of Internet resources, network infrastructure and intelligence at its Smart Energy Innovation Center.
Valley Wonk
OFC & Hyperscale: A Good Mix?

3|24|17   |   01:50   |   (0) comments


Cloud and telecom players want different types of equipment for their networks, as the chatter at OFC reveals.
LRTV Custom TV
Etisalat on NFV Journey

3|24|17   |   10:37   |   (0) comments


Etisalat is a service provider that prides itself on bringing innovative technologies to the markets it serves. It was one of the first operators to implement 3G and leads the pack in fiber penetration. Now, Esmaeel Al Hammadi, Etisalat's SVP of Network Development, explains the operator's journey to virtualization, beginning with the network core, as well as the ...
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 3

3|22|17   |     |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting on the application of technologies and key business verticals such as transportation, smart city, manufacturing, media and finance.
LRTV Documentaries
No Regrets: Cox's Finkelstein on Fiber & More

3|22|17   |     |   (0) comments


At the Cable Next-Gen Technologies & Strategies event in Denver, Cox's Jeff Finkelstein examines the cable capex conundrum.
LRTV Documentaries
Cable Next-Gen: The 'Mile High' View From Denver

3|22|17   |   11:56   |   (0) comments


Alan Breznick kicks off the Cable Next-Gen Technologies & Strategies event in Denver, casting his thousand-yard stare over cable's current competitive landscape.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 2

3|21|17   |   2:27   |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting digital transformation solutions around IoT, smart data centers, OpenCloud ecosystem and its newly announced storage-as-a-service solution.
LRTV Custom TV
Driving Better Mobile Customer Experience While Transforming the Mobile Network

3|21|17   |   7:47   |   (0) comments


The Citrix NetScaler mobile gateway is an intelligent traffic management solution which can markedly improve the customer experience provided by mobile operators, even when traffic is encrypted. Critical network services can be consolidated and virtualized using NetScaler. Because of the unique architecture, NetScaler can be deployed on any hypervisor, on a ...
LRTV Custom TV
Mastercard: What's Next for Mobile Payments?

3|21|17   |   7:49   |   (0) comments


2017 marks the fifth consecutive year for Mastercard at Mobile World Congress and it was a great time to reflect on the amazing advances the payments industry has made as well as discuss "What's Next' in the digital commerce future. We spoke to James Anderson, executive vice president of digital payments at MasterCard, about digital wallets to tokenization to ...
LRTV Custom TV
Mastercard: 2 Billion Adults 'Trapped' in Cash Economy

3|21|17   |   03:51   |   (1) comment


Despite advances made in the last several years, two billion adults around the world are trapped in a cash economy and lack what we take for granted -- a safe way to receive, save and use money. Shamina Singh, executive vice president of sustainability and president of the Mastercard Center for Inclusive Growth, chats about how Mastercard is developing new ways to ...
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
High-Band 5G: Let's Address the Range Question, Shall We?
Dan Jones, Mobile Editor, 3/21/2017
Eurobites: A1, Nokia Turn It Up to 11
Paul Rainford, Assistant Editor, Europe, 3/22/2017
FTTH No Slam Dunk for Cable
Carol Wilson, Editor-at-large, 3/23/2017
Top Priorities for B/OSS Transformation
James Crawshaw, Senior Analyst – OSS/BSS Transformation, Heavy Reading, 3/20/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Neither Do We Click Here
Is that a prerequisite?
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.